US Natural Gas Prices Rise Amid Output Declines and LNG Export Surge

The US natural gas market is entering a pivotal phase in 2025, with prices edging upward as daily production dips slightly while liquefied natural gas (LNG) exports hit record highs. This delicate balance between supply and demand, driven by geopolitical shifts and infrastructure expansions, is reshaping investment opportunities in the energy sector.

Ask Aime: What impact will the US natural gas market's delicate balance of supply and demand have on energy investment opportunities in 2025?

Production Slows, Prices Climb
Despite record output in early 2025, US natural gas production dipped to 105.8 Bcf/d in April, down 0.5% week-over-week, according to S&P Global Commodity Insights. The decline stems from reduced drilling activity, with the gas rig count falling to 96 in April—the lowest since 2016—amid an industry-wide focus on capital discipline.

Yet this slight slowdown has not dampened prices. The Henry Hub futures price for Q3 2025 averaged $3.74/MMBtu, up 17% year-over-year, as storage inventories remain tight. As of April, working gas stocks stood at 1,830 Bcf, 4% below the five-year average, signaling a market increasingly strained by rising global demand.

LNG Exports Soar, Export Infrastructure Dominates
The real catalyst for price resilience is the 19% year-over-year surge in LNG exports, which are now averaging 15.2 Bcf/d. New terminals like Plaquemines LNG Phase 1 (Louisiana) and Corpus Christi Stage 3 (Texas) have added 2.6 Bcf/d of capacity, with Plaquemines alone contributing 1.0 Bcf/d to the EIA’s revised export forecasts.

By April 2025, weekly lng feedgas deliveries hit a record 17.3 Bcf/d, with 28 vessels departing US ports in a single week. Europe’s scramble to refill storage—down to 30% full in early April—has been a key driver, as buyers seek alternatives to dwindling Russian pipeline supplies.

Market Drivers and Risks
- Geopolitical Tensions: China’s 84% tariff on US LPG imports, imposed in April, forced exporters to reroute cargoes to Europe and Southeast Asia. While this maintained export volumes, it highlighted supply chain fragility.
- Storage Challenges: Entering the spring injection season with stocks 450 Bcf below 2024 levels, the US may struggle to rebuild inventories if summer demand surges.
- Price Outlook: The EIA projects Henry Hub prices to climb to $4.29/MMBtu by early 2026, driven by 85% capacity growth by 2028 and Europe’s persistent reliance on US LNG.

Investment Implications
The data paints a bullish picture for LNG-focused firms and infrastructure plays:
1. Export Terminal Operators: Companies like NextDecade Corp (Plaquemines) and Cheniere Energy (Sabine Pass) benefit directly from rising export volumes.
2. Shale Producers: Firms with low breakeven costs in the Appalachian Basin (e.g., EQT Corp) or the Haynesville shale (e.g., Pioneer Natural Resources) are well-positioned to capitalize on prices above $4/MMBtu.
3. Storage and Pipeline Stocks: Enterprise Products Partners and Williams Companies stand to gain as tight storage conditions amplify the need for logistics upgrades.

Conclusion
The US natural gas market in Q2 2025 is a study in contrasts: production has peaked, but strategic declines in drilling have stabilized supply, while LNG exports are surging to meet global demand. With storage deficits and geopolitical risks adding upward price pressure, the sector remains attractive for investors willing to navigate volatility.

The EIA’s forecast of $4.29/MMBtu by early 2026 aligns with the structural tightness of today’s market. Investors should prioritize firms with export-linked revenue streams, low-cost production, and exposure to infrastructure expansion. As Europe’s storage crisis persists and Asian buyers seek reliable suppliers, the US is poised to maintain its role as the world’s LNG swing producer—making this a critical time to engage with the sector.